How It All Fell Apart

The Federal Court has held that internet service providers (ISPs) cannot and should not be called upon to protect the interests of copyright owners. Justice Cowdroy rejected the case of the studios suing iiNet in emphatic terms, saying:

"It is unfortunate that the outcome of the Court’s finding is that the applicants will continue to have their copyright infringed. However, the fault lies with the applicants for choosing the wrong respondent."

Not only did Justice Cowdroy dismiss the studios’ application as a matter of law, he took issue with their view of the facts:

"The applicants appear to premise their submissions on a somewhat binary view of the world whereby failure to do all that is requested and possible to co-operate with copyright owners to stop infringement occurring, constitutes approval of copyright infringement. Such view is not the law."

The studios sought to find iiNet liable for authorising the infringing conduct of its users who illegally downloaded films and TV programs. The case against iiNet was based on iiNet’s failure to comply with numerous notices issued by the Australian Federation Against Copyright Theft (AFACT) on behalf of the studios. These notices contained a substantial amount of specialist forensic evidence gathered by a consultant called DtecNet.

In order to prove the studios’ case, it was necessary to show firstly that there had been infringement by users, and secondly that iiNet’s failure to do anything about the notices amounted to authorising the illegal conduct of the users. While the Court was satisfied that the detailed forensic evidence showed that a number of users of iiNet’s service had infringed copyright regarding a number of the studio’s films, it found that the notices were by no means conclusive in all circumstances or easy to decipher:

"Regardless of the actual quality of the evidence gathering of DtecNet, copyright infringement is not a straight ‘yes’ or ‘no’ question. The Court has had to examine a very significant quantity of technical and legal detail over dozens of pages in this judgement in order to determine whether iiNet users, and how often iiNet users, infringe copyright by use of the BitTorrent system."

The Court also remarked that these notices were not verified as an affidavit or a statutory declaration would be.

The studios maintained that the notices placed iiNet in the position of knowing that infringement by its users was taking place, and the failure of iiNet to take any action was such a gross acquiescence to copyright infringement that it amounted to authorising the infringement. As operators of the offending users’ accounts, the studios insisted that iiNet had the means to stop it. Indeed, according to the studios’ lawyers, iiNet’s business relied upon maximising its users’ internet traffic. And since internet traffic was so overwhelmingly dominated by illegal file sharing by means of BitTorrent files, iiNet had a vested interest in turning a blind eye to the infringement notices.

In making this argument, one of the main cases upon which the studios relied was the Kazaa case, in which it was found that the operators of the Kazaa file sharing software had a vested interest in illegal downloading, and further, that despite the fact that not all activity using Kazaa was illegal, it was predominantly illegal file sharing.

In that case, the Court also took into consideration the exhortations made by Sharman Networks, the operators of Kazaa, to its users to join the "revolution", that is, the illegal file sharing revolution. The studios argued that iiNet was no better than Sharman Networks, and that the entire internet was as much a hotbed of piracy as was Kazaa’s file sharing network; iiNet was letting its users get away with daylight robbery.

Justice Cowdroy considered the key cases governing this idea of "authorisation", and while acknowledging some differences in their reasoning he drew from them what he considered to be the underlying principle of authorisation of infringement. Authorisation, he concluded, requires the authoriser to provide the means of infringement.

In another key precedent, the 1975 Moorhouse case, the University of NSW Library was found to have authorised an infringement by providing the photocopiers used to do the infringing; in the Kazaa case Sharman Networks provided the file sharing software.

However, Justice Cowdroy found that in this case the means of infringement was the BitTorrent system of file sharing — not the entire internet — and while iiNet made access to the internet possible, it had no control over how its users obtained and used BitTorrent and shared the studios’ copyright. "iiNet," he concluded "has no control over the BitTorrent system and is not responsible for the operation of the BitTorrent system." To press home the point and to conclusively distinguish these circumstances from the Kazaa case, he said:

"While the Court expressly does not characterise access to the internet as akin to a ‘human right’ as the Constitutional Council of France has recently, one does not need to consider access to the internet to be a ‘human right’ to appreciate its central role in almost all aspects of modern life, and, consequently, to appreciate that its mere provision could not possibly justify a finding that it was the ‘means’ of copyright infringement."

Interestingly, while Justice Cowdroy found therefore that iiNet did not supply the means of infringement, he went on to say that even if he was wrong and that iiNet did "authorise" its users infringing conduct, iiNet would still be able to rely upon the "safe harbour" provisions of the Copyright Act.

The importance the parties had placed on the safe harbour provisions and the lack of any previous judicial decisions on these provisions, he said, required him to address this issue. Under those provisions, where a carrier (including an ISP) has adopted and reasonably implements a policy for termination in appropriate circumstances of the accounts of a repeat infringer, then the remedies against the carrier are to require the carrier to terminate the repeat infringer’s account. Where an industry code exists, the safe harbour provision means that code must be applied. As there was (and is) no such industry code, he held that iiNet could rely upon its own apparently undocumented and ad hoc policy.

It’s a result the studios will not be happy with. Their options from here seem to be either an appeal to the High Court or to sort out a code of conduct. Senator Conroy has ruled out making changes to the law and made his position on the matter clear on the ABC’s Hungry Beast program last year. He said, "I think that a mature approach by both the movie industry and the internet industry — sitting down, having a conversation, and coming up with a code of practice — is the absolutely preferable outcome."

Given such a resoundingly favourable decision and that the absence of any code clearly best suits the ISPs, one would be forgiven for suspecting that the ISPs won’t be in any big hurry to set one up.